According to the latest report from the Ministry of Finance, as of the end of 2022, there were 79 insurance businesses in the insurance market, with total assets seeing an increase of 14.51 per cent compared to 2021.
An SSI Research industry report on insurance published on January 8 calculated that in the first nine months of 2022, insurance premium revenue was over $7.5 million, up 17 per cent over the same period, of which life and non-life insurance premium revenue increased 16 and 19 per cent, respectively.
However, the growth rate slowed slightly at the end of the year, with total original premium revenue reaching almost $10.7 million as of December 12, 2022, up 15.1 per cent on-year. This is the slowest growth rate since 2013.
Life insurance premium revenue growth was lower than expected. In the first nine months of 2022, new premium revenue increased by 6 per cent on-year, and total premium revenue climbed by 16 per cent. Both are much lower than the averages during and before the pandemic, SSI said.
Non-life insurance premium revenue surged 19 per cent in the first nine months of 2022, the highest annual growth rate since 2011.
“The growth rate of non-life insurance premium collection is often associated with GDP growth. In the first nine months of 2022, the retail segment grew strongly compared to the same period the previous year due to the absence of social distancing in 2022,” the report added.
Motor insurance premium revenue and personal accident/health insurance expanded at the highest rate in the past five years, 17 and 30 per cent, respectively, over the same period last year.
The report emphasised that competition was still fierce in both life and non-life insurance. Personal accident/health insurance is considered to have great growth potential in the long term, as well as having better returns than motor vehicle insurance.
“Meanwhile, the race for market share will continue to be fierce among the top three life insurers (BVL, Manulife, and Prudential),” SSI explained. “In terms of profits, investment and insurance operating profits were affected. Although premium revenue grew relatively well, insurance enterprises’ profit decreased after tax.”
In 2023 and in the longer term, the Law on Insurance Business 2022 (LIB) officially coming into effect is the factor that has the biggest impact on Vietnam’s insurance businesses.
Insurers assessed that the law aims to enhance transparency, standardise information on insurance products, and promote efficiency and sustainability in business activities.
“The LIB requires insurance companies to provide full information to customers and strengthen the requirements on the advisors’ responsibilities,” said Tina Nguyen, CEO of Generali Vietnam. “These regulations will help better protect customer interests, and ensure the improvement of the quality and professionalism of the consulting team’s activities, thereby enhancing customer trust.”
Likewise, the SSI report assessed that the new law would significantly impact the industry.
“With the new LIB, we believe that insurance businesses will promote their micro-insurance activities. We’ve also noticed that a number of businesses have been actively implementing these products in 2022, and will likely continue to roll them out in 2023,” noted the report.
SSI Research forecasted non-life insurance premium revenue growth to be lower than 2022, at 10-12 per cent, as the claim ratio comes under pressure due to high inflation and rising prices of goods, supplies and medical expenses, while insurance fees are likely to remain stable under competitive pressure.
Meanwhile, life insurance’s total premium revenue is expected to grow 16-18 per cent, higher than in 2022.
“Profits of non-life insurers are expected to fluctuate strongly from quarter to quarter. However, with a low comparative basis in the second and third quarters of 2022, we believe that profit growth over the same period will be higher in 2022,” the report said.
Experts assessed that motor vehicle and personal health insurance would continue to grow rapidly in 2023. “Personal health is the area that brings in the highest premium revenue, with the total revenue surpassing motor vehicles in the last two years. People’s healthcare needs are increasing, especially after the pandemic,” Do The Vinh, CEO of online app ibaohiem noted. “The deployment of digital social insurance applications has partly helped to clean up the health insurance market, as insurance companies can now quickly verify the status of participants.”
This proves that having a common database is necessary for accurate risk assessment, avoiding dishonest declarations, and creating fairness among insurance participants, Vinh added.
In terms of other bright spots, Vinh said that 2023 would be a thriving year for distribution channels. However, the legal corridor changes might pose challenges.
“Insurance companies will pay more attention to cooperating with new distribution channels, such as institutional agents, general agents, and technology companies, in addition to traditional channels such as individual agents and bancassurance,” Vinh said. “However, challenges may arise as the amended LIB has had many changes. This could have a huge impact on product distribution channels.”
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